How to Maintain a Fixed Asset Register Under Companies Act 2013
Published: April 4, 2026
Reviewed by CA Kiren Kumar K
A fixed asset register under the Companies Act 2013 is the detailed record of a company's assets that supports the books of account required by Section 128. For each asset it should capture identity, cost, location, custodian, depreciation under Schedule II, and disposal — and CARO 2020 Clause 3(i) requires those assets to be physically verified.
Every company registered under the Companies Act 2013 is expected to maintain proper records of its fixed assets. In practice, many organisations — especially in the SME segment — maintain asset records in Excel spreadsheets that gradually become incomplete or inconsistent. This article walks through what a structured fixed asset register looks like, what the Act and related standards expect, and where common gaps appear during audits.
1. What the Law Expects
The Companies Act 2013 addresses fixed assets through multiple provisions:
- Section 123(2): Depreciation must be provided in accordance with Schedule II before declaring dividends.
- Schedule II: Prescribes useful life for various asset categories. Companies may use rates based on useful life or adopt rates that result in the same pattern of depreciation.
- Section 128: Books of account must include records of all assets and liabilities, maintained at the registered office.
- CARO 2020 Clause 3(i): The auditor must report on whether the company maintains proper records showing full particulars, including quantitative details and situation of fixed assets, whether physical verification has been conducted at reasonable intervals, and whether any material discrepancies were noticed.
Accounting Standard 10 (AS 10) and its Ind AS equivalent (Ind AS 16) define the recognition, measurement, and disclosure requirements for property, plant and equipment.
2. Structure of a Fixed Asset Register
A register that supports these requirements typically captures the following for each asset:
| Category | Fields |
|---|---|
| Identity | Asset ID, description, classification (FA / inventory / consumable), serial number, make/model |
| Financial | Cost of acquisition, date of acquisition, depreciation method (SLM or WDV), depreciation rate, accumulated depreciation, written-down value |
| Location | Department, building/floor/room, custodian, physical tag ID (QR or barcode) |
| Lifecycle | Useful life (per Schedule II or company policy), date put to use, disposal date and method, disposal proceeds |
| Compliance | GST input credit claimed, HSN/SAC code, capitalisation voucher reference, depreciation FY snapshot |
Register format — the columns to capture
The fields above translate into a column-by-column register. This is the layout most SME finance teams find sufficient for Companies Act 2013 and CARO 2020 reporting — recreate it in a spreadsheet, or maintain it in a structured system:
| # | Column | Why it is there |
|---|---|---|
| 1 | Asset ID / code | Unique identifier; ties to the physical tag |
| 2 | Description | What the asset is |
| 3 | Asset class / category | Maps to Schedule II useful life |
| 4 | Date of acquisition / put to use | Depreciation start point |
| 5 | Vendor & purchase reference (PO / GRN / invoice) | Acquisition trail for audit |
| 6 | Cost (incl. capitalised taxes) | Gross block |
| 7 | Location (site / building / floor) | CARO “situation of fixed assets” |
| 8 | Department & custodian | Accountability |
| 9 | Depreciation method (SLM / WDV) | Basis of charge |
| 10 | Useful life / rate (Schedule II) | Statutory basis |
| 11 | Residual value | Feeds the depreciation calculation |
| 12 | Accumulated depreciation | To date |
| 13 | Net book value | Gross block less accumulated depreciation |
| 14 | Physical tag ID (QR / barcode) | Verification link |
| 15 | Last verified date & condition | CARO physical-verification evidence |
| 16 | Disposal / write-off date, method, proceeds | Derecognition & gain / loss |
You can request this register format as a starting layout, or maintain it in a structured register that keeps additions, disposals and verification records flowing in without manual gaps.
3. Depreciation Methods — SLM vs WDV
Schedule II of the Companies Act 2013 prescribes useful life for different categories of assets. Companies may choose either the Straight Line Method (SLM) or the Written Down Value (WDV) method.
Straight Line Method (SLM)
Depreciation is charged uniformly over the useful life. If a computer has a useful life of 3 years, the annual depreciation is approximately 33.33% of cost. This method is simpler to apply and results in equal charges each year.
Written Down Value (WDV)
Depreciation is charged on the reducing balance. The rate is higher in early years and tapers off. Income Tax Act Section 32 uses WDV rates, so some organisations maintain dual depreciation — WDV for tax purposes and SLM for books.
A structured register should support both methods per asset classification, with the ability to lock depreciation for audited financial years while allowing corrections in the current year.
4. Classifying fixed assets under the Companies Act 2013
Classification is the step that makes the register usable: it decides the useful life and depreciation each asset carries, how the asset is presented in the financial statements, and how it is grouped for verification and reporting. Three layers of classification matter under Indian law.
1. Asset class and useful life — Schedule II
Depreciation is charged under Schedule II to the Companies Act 2013 (read with Section 123) on a useful-life basis. Schedule II, Part C, prescribes indicative useful lives by class of asset — for example, buildings, plant and machinery, furniture and fittings, office equipment, computers, and vehicles each carry their own life. A company may adopt a different useful life or residual value only with disclosure and technical justification. Residual value is generally retained at not more than 5% of original cost.
2. Components — significant parts of an asset
Where an item of property, plant and equipment has parts with a cost that is significant in relation to the total and a different useful life, those parts are depreciated separately — component accounting. Classification therefore is not only "which class" but "which significant components within the asset" need their own line and life.
3. Presentation — Schedule III
For the balance sheet, assets are presented under Schedule III — gross block, accumulated depreciation, and net block, with additions and disposals reconciled in the property, plant and equipment note. Tangible PPE, intangible assets, and capital work-in-progress are shown separately. A register that is classified consistently with Schedule III is what lets the note reconcile without manual rework.
Tax classification is a different system. For income-tax, assets are grouped into blocks of assets under Section 32 of the Income-tax Act 1961 and depreciated on the written-down-value method at prescribed rates; the 1961 Act has since been replaced by the Income-tax Act, 2025 (in force 1 April 2026), which carries the block-of-assets basis forward. The Companies Act classification (useful life, Schedule II) and the income-tax classification (blocks, WDV) are maintained in parallel and should not be conflated.
Getting classification right at the point an asset is capitalised — class, components, and the matching Schedule III grouping — is what prevents the year-end scramble to reclassify the register before the audit.
A related year-end statutory point sits on the payments side rather than the assets side: amounts paid to micro and small vendors that are capitalised into the register fall outside the revenue-deduction disallowance under the Section 43B(h) MSME 45-day payment rule and its year-end reconciliation, while the same vendors' revenue purchases are squarely within it.
5. Common Gaps Found in Audits
Based on our experience working with organisations on their asset records, these are the recurring issues auditors flag:
- Missing location details: The register shows asset descriptions and costs but not where assets are physically located. CARO 2020 specifically asks about "situation of fixed assets."
- No physical verification trail: CARO 2020 requires verification at "reasonable intervals" (typically once a year). Without a recorded verification — who did it, when, what was found — the auditor has no evidence. See our guide on structured physical verification.
- Stale depreciation rates: Companies continue using old rates without mapping to Schedule II useful life. When Schedule II was introduced (April 2014), many companies didn't re-compute useful life for existing assets.
- Missing disposal records: Assets are physically disposed of but remain on the register at full cost. This overstates the asset base and distorts depreciation. A governed removal process ensures every disposal, write-off, or scrap is recorded with an approval trail.
- No link between procurement and capitalisation: Assets are purchased through a procurement process (PO, GRN) but the register is maintained separately. When the auditor asks for the purchase trail of a specific asset, it requires manual cross-referencing.
- Year-end snapshots missing: Without locking the register at year-end, corrections made in the current year inadvertently change prior-year balances.
Download: CARO 3(i) readiness checklist (PDF, one page) — a tick-box self-assessment covering clauses 3(i)(a) to 3(i)(e), reviewed by CA Kiren Kumar K, FCA.
6. What a Good Register Enables
When the register is structured correctly, it supports:
- Audit readiness: CARO 2020 reporting requirements are answerable directly from the data — asset-wise details, verification records, discrepancy reports.
- Depreciation accuracy: Year-end snapshots ensure audited periods are locked. Current-year corrections don't affect prior balances.
- Procurement traceability: Each asset traces back to its purchase requisition, purchase order, and goods receipt — a complete audit trail from request to capitalisation.
- Physical verification: QR-tagged assets can be scanned during verification campaigns, producing a systematic record of what was verified, what was missing, and what condition assets are in.
- Tally integration: Capitalisation and depreciation entries can be generated as Tally-compatible vouchers, reducing manual data entry and reconciliation effort.
Companies maintaining this register in a spreadsheet usually move to fixed asset register software once the audit-trail requirement under Rule 3(1) of the Companies (Accounts) Rules 2014 (in force from 1 April 2023, under Section 128) makes a tamper-proof, CARO-ready record necessary.
7. Getting Started
If your organisation currently maintains asset records in Excel or across multiple disconnected systems, the typical path is:
- Audit your current data: What fields do you have? What's missing? Are location details and depreciation rates current?
- Define your classification structure: Map asset categories to Schedule II useful life. Decide SLM or WDV per category.
- Migrate: Import your existing data into a structured register with validation — catch errors before they become audit findings.
- Tag and verify: Generate QR tags for physical assets and run an initial verification campaign to establish a baseline.
- Lock and maintain: Take a year-end snapshot, start the new year on a clean register with proper depreciation schedules.
ProcureTrail supports this workflow — from bulk data migration with validation, to depreciation management with year-end snapshots, to QR tagging and verification campaigns. The register connects back to procurement so every asset has a complete acquisition trail.